11.09.18

Michael Lewis’s book “The New New Thing” was published the same week as I moved to Silicon Valley in October 1999 and provided a great tour through the landscape at the high point of the Dotcom Bubble, just as his Liar’s Poker was a signature story of the 1980s Wall Street boom. Unfortunately we don’t have anything quite the same about New Space, although Tim Fernholz’s book comes close.

However, just as it was obvious back in 1999 quite how untethered Silicon Valley had become from real world business models, the New New Space industry seems intent on demonstrating the same about the space sector. In recent months I’ve heard about numerous planned nano-satellite constellations that are struggling to raise funding (beyond their $10M or so in proof of concept venture capital) and may run out of money soon, because they simply don’t have a credible business plan.

Looking elsewhere, it seems that 5G IoT and “Armani WiFi” are not really such convincing buzzwords after all (sorry Charlie and Jay), and Ligado’s lobbyists can’t outwit Brad Parkinson’s “fervent ally” in the White House, so some if not all of those multi-billion dollar investments will soon prove to be a complete debacle as well.

But the poster child for the bursting of the bubble can be seen in SpaceX’s increasing frantic attempts to raise money in the face of a rapid decline in launch demand, and increasing competition from Blue Origin, which doesn’t need to make a profit. Firing your bankers because they are nervous about how much additional debt you will take on in the future is a bad sign, and redesigning your constellation to hide its problems seems even more bizarre.

SpaceX’s launch tempo is already falling, with 10 launches now scheduled for the second half of 2018 compared to 12 in the first half, far short of the 50% increase in 2018 launches and medium term 30-40 launches per year that the company predicted only a year ago. So its an open question what the core business is worth, but with $270M in LTM adjusted EBITDA (which counts deposits and excludes some R&D) and a declining revenue outlook for 2019, the valuation of $28B achieved this spring is clearly ludicrous.

SpaceX’s attempts to find new sources of revenue are also proving deeply problematic because the broadband satellite constellation business now appears to be in even more dire straits than the launch business. Recently rumors have circulated that SoftBank is looking to exit from OneWeb (before the next tranche of its $1B equity commitment is due after the test satellites are launched in early 2019), as the system costs increase and questions abound over the size of the market opportunity for satellite broadband. Certainly Masa Son’s attitude to the project appears to have changed dramatically in the last year, from touting satellite as an alternative to fiber, to not even mentioning satellite in a recent lengthy feature on the Vision Fund.

And finally, given the lack of demand for launch services, the need for the BFR now seems highly questionable, except as a vehicle for space tourism. Since SpaceX is likely to have investment needs of $1B+ per year just for BFR and the debt capacity of the company is unlikely to be more than about $2B, it therefore wouldn’t be in the least surprising if the company’s next step in 2019 is to start taking more deposits from potential tourists who want to emulate Japanese billionaire Yusaku Maezawa. In the meantime, soliciting contracts from anyone who might offer a cash deposit seems like another avenue SpaceX will be exploring.

Looking back once again to 1999, it seems quite relevant to note that the first major meltdown (the Iridium bankruptcy) came in August 1999, well before the bursting of the wider tech bubble. And it now appears that there are several multi-billion dollar satellite projects that could suffer the same fate within the next year. What will that mean for investor perceptions? Will incumbents benefit? And which elements of this new technology will prove to be useful in the long run?

And subsequently, SpaceX has been positioning itself to play a role in DARPA’s Blackjack satellite constellation program, which will provide total funding of up to $117.5M to be split between several bidders. Notably, SpaceX filed a new experimental application with the FCC in August 2018 “to reflect additional test activities undertaken with the federal government” and add “two new types of earth stations, one of which will transmit uplink signals to the Microsat satellites first from the ground and later from a moving aircraft”. In that application, SpaceX told the FCC that:

“These experimental engineering verification vehicles are currently engaged in the test regimen as authorized, in order to enable the company to assess the satellite bus and related subsystems, as well as the operation of space-based and ground-based phased array technologies.”

As he looks to secure both DARPA funding (which should be announced in the next couple of weeks) and FCC approval of the new experimental license application, Elon Musk is certainly extraordinarily sensitive to any suggestion that there might be a problem with Starlink. Notably, within a few hours after my previous blog post appeared on September 18, it seems he planted a (rather bizarre) question on Twitter so that he could state that “Starlink should be active by then [2023]“. Indeed, he was so keen to get this assertion out there that the same question was posted twice.

But the reality is that the Starlink satellites have not performed in accordance with the plan that SpaceX presented to the FCC as recently as February 1, 2018, when Patricia Cooper told the FCC that:

“As set out in the original application, after system checkouts are performed and the system is evaluated as ready to proceed, SpaceX will engage in orbit-raising maneuvers until the spacecraft reach a circular orbit at an altitude of 1,125km.”

“After system checkouts are performed and the system is evaluated as ready to proceed, the orbit-raising phase of the mission will commence. This segment will last approximately half a year depending on system performance.”

But what has actually happened? Both satellites have remained around the launch altitude of 514km, with TinTin A not showing any meaningful evidence of propulsion since at least early March, and TinTin B not experiencing any significant change in altitude after attempting a few orbital maneuvers. So it seems all but certain that there has been a major issue with the propulsion system onboard both of the Starlink satellites.

When confronted with the rumors of a satellite failure by SpaceIntelReport, SpaceX stated that the satellites “were delivered to their intended orbit, communicated with ground stations, continue to communicate with ground stations, and remain in operation today.” That may all be true, but says nothing about whether the propulsion system has failed.

Unsurprisingly such a failure would put SpaceX in a very awkward position, when there were already many questions about whether Starlink would go forward, not least because the satellites may not reach the correct orbit to bring SpaceX’s ITU filing into use, and the FCC’s experimental authorization was based on the assumption that mission operations would be conducted at 1125km. And if SpaceX cannot build satellites with a reliable propulsion system, that would reinforce concerns expressed by FCC Commissioner Rosenworcel in SpaceX’s license grant that “the FCC has to tackle the growing challenge posed by orbital debris.”

09.18.18

Yes I know it’s only 384,000 km to the Moon, but just like Elon, I decided to round up. After all, it’s apparently “better karma”!

Last night’s SpaceX event raised a lot of questions for many observers, not least because it “caught some SpaceX employees off guard” and was rushed out so fast that some of the promotional imagery was incorrect. However, I suspect that the reason for this surprise announcement was to distract from impending bad news about the Starlink project, namely that the project has for all intents and purposes been put on hold.

We already knew that there was a significant reduction in hiring in early July, but I’m told the cutbacks went much deeper, with a significant fraction of the Starlink team departing. SpaceX was also looking to develop a more concrete business plan for the project in Q2, but I believe it proved impossible to come up with anything remotely close to the ludicrous forecasts from 2016 reported by the Wall St Journal that suggested the project would have over 40M subscribers and $30B in annual revenues by 2025.

Ironically enough, the principal mention of Starlink last night was as a source of funding for the BFR development. It makes no sense whatsoever to think that Starlink will generate profits to fund a $5B+ BFR development between now and 2023, so the only logical conclusion is that money raised for Starlink will now be diverted to the BFR. Another hint that Starlink is going away was the statement that BFR is expected to consume the majority of engineering resources after the commercial crew development has been completed for NASA next year, despite Starlink supposedly costing more to develop than BFR ($10B+ compared to ~$5B) over the next 5 years.

It’s only natural that SpaceX would look for a replacement market that can be projected to generate billions of dollars of profitable revenue, and the company now appears to have settled on space tourism, as previewed by Gwynne Shotwell last week, when she suggested that it “will probably be the majority of our business in the future, flying people” with “7 billion potential payloads“.

However, the critical question is whether investors will remain sanguine about such a dramatic transformation in where over 80% of SpaceX’s future revenues are supposed to come from. Do investors that thought they were investing in the future of connectivity, really want to invest in taking rich people to space? And does the checkered track record of space tourism give them confidence that Elon’s promises will actually be realized, especially as it will take 5+ years and $5B+ of additional investment (even by Elon’s optimistic estimates) before the BFR is ready to transport passengers to the Moon?

03.19.18

At Satellite 2018 last week it was interesting to note how after dominating some recent conferences, the role that Silicon Valley companies might play in rolling out new global broadband satellite networks was barely even mentioned. That’s probably because betting on these companies to anchor new satellite systems could now be said to have cost two industry leading CEOs their jobs, and it remains conceivable that the same could happen to a third.

Then last month, SES announced that Karim Michel Sabbagh was stepping down as CEO, after his decision last year to skip Satellite 2017 because of the “number of exciting things we are working on”. At that time he suggested that “Some of these will come out in early April” but in fact the major announcement was delayed until early September, when SES ordered the O3b mPOWER satellites from Boeing.

In the interim, SES had been working to secure an anchor tenant from Silicon Valley, highlighting its collaboration with Google to provide backhaul for Project Loon in Peru and pointing to its deal with Facebook in Africa as an example of its redefined enterprise market strategy. SES even went so far as to select Boeing’s much more advanced and expensive architecture for O3b mPOWER in an attempt to convince prospective partners that the system would meet their future needs, but was forced to go ahead without the partner that SES’s board had expected to see in order to justify their investment commitment, undermining Sabbagh’s position.

Now it appears that Telesat is seeking partners for its own NGSO satellite project, which its CEO was very bullish about at Satellite 2018. We hear that Telesat may also be looking to Silicon Valley for an anchor tenant commitment to its new system, which it hopes to announce in the next few months. However, I have to hope that Dan Goldberg is not placing all his eggs in that basket, or else he may end up being the third satellite industry CEO in a row to suffer from the inability of Silicon Valley companies to commit to major investments in satellite connectivity projects.

01.09.18

Last fall, I found Harris’s announcement on its 2017Q3 results call that “we received our largest order for a single commercial satellite covering four reflectors, bringing total orders to eight over the past two years” to be particularly odd because the only commercial satellites on order with four unfurlable reflectors are ViaSat-3.

Viasat then effectively confirmed that they had made this order in their 10-Q, which showed that Viasat’s total satellite purchase commitments increased from $1037.5M to $1106.6M during the quarter and that the size of Viasat’s contract with Boeing had increased by $11.2M in the same quarter (presumably to cover integration of the Harris antennas).

Not only was Viasat’s order quite late in the game (some knowledgeable observers assumed that it would have been ordered back in 2016), but it is also just for one satellite, not for both of the ViaSat-3 satellites that are under contract with Boeing. Viasat may well have another purchase option (which it can exclude from its purchase commitments for the time being), but it is still surprising that it took so long to reach an agreement with Harris. And it may suggest that the construction schedule for Boeing’s second ViaSat-3 satellite will be longer than originally thought.

Another curious issue was Viasat’s decision to use a fake image of ViaSat-2, which Viasat’s President Richard Baldridge later admitted “in fact is not the actual ViaSat-2″ satellite, because “we obscured the sensitive parts”. It is hard to understand why Harris’s antennas are deemed so sensitive by Viasat when Harris themselves were happy to publish a mockup image back in 2016 (which has since been removed from their website) and the size of the antenna can easily be worked out from Viasat’s own FCC submissions.

Although I have no evidence to suggest this is actually the case, one possible reason for these two apparent coincidences would be if Viasat had sought to patent some features relating to deployment of the Harris antenna on ViaSat-2 in order to try and prevent rivals from making use of Harris’s unfurlable Ka-band antennas (in particular Hughes and SS/L will likely use them for Jupiter-3). That would certainly explain Harris’s decision to highlight during the Q3 results call that the commercial reflector business is “a commercial model driven business where we invest our own R&D to develop that offering. We sell it into the marketplace.”

Now we have Viasat revealing today that Boeing “has identified an in-orbit antenna issue, which has caused some spot beams to perform differently than they did during ground testing.” It seems very likely that the issue is related to the unfurlable 5m Harris antennas, since “Viasat believes the issue will not affect the coverage area of the satellite” and the smaller solid antennas will provide most of the geographic coverage, while the larger unfurlable antennas will provide the high capacity coverage within the continental US.

It also seems somewhat more likely that this is a deployment problem (i.e. an issue primarily for Boeing/Viasat) rather a problem with the antenna itself (i.e. an issue primarily for Harris), since the antenna performed “differently” (and presumably correctly) during ground testing. If this problem relates to a new feature that Viasat or Boeing introduced, then that would clearly be particularly contentious, especially if it was related to any patent issues that might have been in play previously. So now we need to wait and see how the blame game develops and what this means for the future relationship between Harris and Viasat.

Perhaps it is true that the best answer would have been to push harder on unbundling local loops to facilitate service-based competition on telco networks, just as in Europe, but that ship sailed 15 years ago when the CLECs went bankrupt. Instead, going all the way back to the 1996 Telecom Act, the US has focused on infrastructure-based competition between cable and telcos, which unsurprisingly hasn’t produced the same level of competition, due to the cost of maintaining multiple access networks.

Maybe this is a failed model and we now have to be content with regulating the current oligopoly of cable and telcos to ensure they don’t behave badly (and we can certainly debate exactly how much regulation is needed to achieve that). But perhaps wireless broadband will provide some level of new competition for fixed providers. I dismissed that possibility 6 years ago, but now I’m increasingly convinced that the enormous efficiency gains coming from MIMO will provide wireless operators with more capacity than they know what to do with, enabling them to deliver wireless broadband in the home to at least some (meaningful) number of consumers.

Whether that’s ultimately 10% or 30% of households very much depends on how much capital is available to invest in those networks. And how good the performance will be remains to be seen – after all the 13% of adults who are smartphone only internet users are mostly doing it for cost reasons and “often encounter difficulties like accessing and reading content, as well as trouble submitting files and documents.”

But that’s not my primary focus here. One point made by net neutrality proponents such as Barbara van Schewick is that for the last 20 years, the regulation of telecom networks has been backed by both Republican and Democrat administrations and so the current proposal is a radical change in precedent. You can argue with the truth of that prediction, depending on whether you think the FTC will actively enforce antitrust law to deal with future net neutrality problems, but what is interesting to me is that many of the actions cited by van Schewick were taken to support content providers like Netflix or Google when those companies had a lot less power than they do today.

Some of those actions had significant costs, such as (Republican FCC chairman) Kevin Martin’s decision to attach “lifetime net neutrality conditions to parts of the 4G spectrum that [the FCC] auctioned off in 2008″. That action was taken at the behest of Google, but the result was that Verizon acquired 22MHz of upper C-block spectrum for only $0.76/MHzPOP, a 41% discount to the average price in the auction, and a more than 70% discount to the price paid (mainly by AT&T) for the lower B-block. Thus Google’s “net neutrality” lobbying effort potentially cost the government somewhere between $5B and $10B in lost auction proceeds, without having any substantial impact on the wireless services you receive today (are you more likely to choose Verizon because some of its spectrum comes with “open access” conditions?).

Of course net neutrality has not been the only area where Silicon Valley companies have sought or obtained favorable regulatory treatment compared to telcos and cable companies. The last Commission’s set top box proceeding and proposed privacy regulations were both seen as favoring Google, Amazon and Netflix over Verizon and Comcast. The current Commission is tilting the playing field back towards access providers by abandoning these efforts and dismantling the net neutrality rules, and opponents argue that it is going too far, because of the lack of competition in access provision and because they don’t trust the wolves at Comcast, Verizon and AT&T.

But if its now a debate about whether you can trust businesses in general to behave reasonably, can you trust Silicon Valley companies any more than ISPs? Do Google and Netflix need regulatory advantages over ISPs now they are so powerful? Are ISPs any more of a monopoly than Google or Facebook or Twitter, and which of them are more likely to be disrupted in the future? Those are the questions that are now being raised, most explicitly in Chairman Pai’s speech yesterday, where he noted that:

“despite all the talk about the fear that broadband providers could decide what Internet content consumers can see, recent experience shows that so-called edge providers are in fact deciding what content they see. These providers routinely block or discriminate against content they don’t like
…
Nonetheless, these companies want to place much tougher regulations on broadband providers than they are willing to have placed upon themselves. So let’s be clear. They might cloak their advocacy in the public interest, but the real interest of these Internet giants is in using the regulatory process to cement their dominance in the Internet economy.
And here’s the thing: I don’t blame them for trying. But the government shouldn’t aid and abet this effort. We have no business picking winners and losers in the marketplace. A level playing field, not regulatory arbitrage, is what best serves consumers and competition.”

09.15.17

This week in Paris all seemed calm, after the turbulence of the last few years, with the only major announcement coming from SES with its new O3b mPower MEO constellation. But under the surface a lot is happening, and (perhaps appropriately) I think we are now just in the eye of the hurricane, and the storm will shortly ramp up once again, before we find out who and what will be left standing in a couple of years time.

SES’s announcement came several months after it selected Boeing to build the O3b NEXT constellation (the “development agreement” was announced in July as part of SES’s half year results) and the delay until now appears to have been due to SES waiting for an anchor tenant that never materialized. In fact I believe SES originally expected to announce the contract in May, as was hinted at when SES’s CEO said he was “too busy” to go to Satellite 2017). However, SES is clearly not willing to see OneWeb, ViaSat and Inmarsat take the lead in new data-oriented satellite systems, whether or not it secures a major anchor tenant for this system.

Another subject of much debate is what Panasonic will decide to do now its original plan to invest in dedicated XTS satellites appears to be dead. Panasonic wants to lay off much more of the risk on a satellite operator, rather than underwriting the satellite costs in full, as Thales did with SES-17. Will an FSS operator be prepared to take this risk, bearing in mind that Intelsat is short of money, SES is now building O3b NEXT (which won’t be well suited for high latitude aero operations) and Eutelsat is intending to partner with ViaSat? Or would Panasonic do something more radical and let a rival like Inmarsat take over provision of connectivity services?

Finally, Inmarsat seems to be under a lot of pressure after a 15% decline in its share price in the last two weeks, and some were speculating that recent personnel changes were connected to this uncertain outlook. Profitability of aero contracts (notably that with Lufthansa) remains a major concern, and issues remain to be resolved for the EAN air-to-ground network, especially if Inmarsat is forced to provide a more robust satellite link in the wake of ViaSat’s legal challenge.

All of these issues provide much food for thought, and could lead to significant realignments in the industry over the next year. Decisions affecting the inflight connectivity market are almost certain to occur, because Panasonic can’t wait too long to provide clarity on its future positioning, and so we had better batten down the hatches for the coming winds of change.

However, the key text on the geographic scope of the FCC’s in-line interference avoidance rule (that requires the spectrum to be shared equally between NGSO systems when their satellites are aligned with one another) marks a major defeat for SpaceX, because the FCC will allow the ITU’s “first-come, first-served” coordination procedures to take precedence for non-US systems operating outside the US.

53. Geographic Area. SpaceX and SES/O3b ask that we clarify the geographic scope of our NGSO FSS sharing method as it relates to non-U.S.-licensed satellite systems granted U.S. market access. While SpaceX argues that it should govern such operations worldwide, a grant of market access typically considers radiofrequency operations only within the United States. Sharing between systems of different administrations internationally is subject to coordination under Article 9 of the ITU Radio Regulations. We believe this international regime is the appropriate forum to consider NGSO FSS radiofrequency operations that fall outside the scope of a grant of U.S. market access. Because ITU coordination procedures do not apply between two U.S. systems, our coordination trigger of ΔT/T of 6 percent will govern such operations both within and outside the United States.

OneWeb is licensed by the UK and Telesat by Canada, and these systems have ITU priority in the Ku and Ka-band NGSO spectrum respectively. Thus SpaceX will have to operate on a non-interference basis with respect to these systems in either band outside the US. This (proposed) ruling represents a big problem for SpaceX, which needs to find another line of business outside of launch to justify its latest $21B valuation.

The key purpose of SpaceX’s accelerated launch schedule is to beat OneWeb (which plans to launch its 10 test satellites in early 2018) to orbit, as under the FCC’s regulations, the first system to launch gets to choose its “home” spectrum during an inline event. Presumably on the assumption that possession is nine-tenths of the law, SpaceX also recently extended the planned lifetime of these two satellites from 6 months to at least 20 months, stating that “if this lifetime is exceeded, SpaceX plans to continue operation until such time as the primary mission goals can no longer be met.”

However, now the FCC’s proposed order appears to have derailed its strategy, SpaceX will need to find a way to gain ITU priority, if it is to build and operate a global constellation. From this point of view, Telesat, which has been adamantly defending its ITU priority, appears to be sitting pretty. Indeed we are told that after its planned test satellite launch later this year, Telesat will wait until next summer before deciding how to move forward, presumably expecting to have a wide variety of suitors once its ITU priority status is recognized.

A joint venture with SpaceX (to which Telesat contributes its licenses and SpaceX brings the money) is certainly a plausible option, though it would require SpaceX to shift its plans to Ka-band. However, if this became a real possibility, it wouldn’t be surprising for SoftBank to try and head off SpaceX by investing in Telesat, or perhaps even buying Loral Space and Communications.

The ramifications of such a move on SoftBank’s part would be even more significant, given that Intelsat’s investors apparently expect SoftBank to return to the negotiating table next year, after they rejected SoftBank’s previous offer in May, and a switch to Telesat would put them in a tricky position.

So now we have to wait and see how SpaceX responds to this setback. Will SpaceX still move forward aggressively into the satellite business or will some of the executives who have in the past counselled caution gain the upper hand? Will the experimental launch proceed on plan (I assume so)? And most importantly, which partners will emerge for Telesat’s proposed LEO system?

05.14.17

Back in June 2016 there was considerably excitement around ViaSat’s sole source $73M contract to provide connectivity for Air Force One and other senior leadership aircraft. The plan was to replace Boeing’s Ku-band BBSN (which has continued to operate ever since the commercial Connnexion-by-Boeing project was cancelled in 2006) with a dual Ka/Ku-band solution which could utilize the ViaSat Ka-band satellites within their coverage footprint and then switch back to Ku-band in other parts of the world.

I’m told that one reason this upgrade happened was that President Obama’s daughters complained that the connectivity on Air Force One compared unfavorably to the speeds available on other ViaSat-equipped aircraft they had flown on, and ViaSat ultimately received a sole source contract, with the US government purchasing a couple of dozen of ViaSat’s dual Ku/Ka antennas in addition to the airtime contract.

But I’ve heard rumors that the RF performance of this Ku/Ka antenna failed the WGS compatibility tests required by the Air Force, and so to date the US government has not installed these new terminals, and Air Force One is apparently still operating with the old Boeing system. Its unclear what the end result will be, or if this is an easily solvable problem, but ViaSat’s competitors (especially Inmarsat, which has successfully leased GX capacity to the DoD for manned surveillance missions in the Middle East) are now rubbing their hands with glee.

[UPDATE 5/15] A spokesperson for ViaSat states that this rumor “is inaccurate. ViaSat is on target with our testing and deliverables, per our DISA contract.”

The broader prospects for ViaSat’s Ku/Ka antenna also appear uncertain, with the only commercial customer to date being Virgin America, which is using a handful of terminals on its Hawaii routes. Virgin America’s new owner, Alaska Airlines, has announced its intention to replace its existing Gogo ATG solution with a high speed satellite solution, but some now think that Gogo’s recent lease of the AMC-4 satellite for Pacific coverage means it will win this business with 2Ku.

Its interesting to note that Gilat has also developed a Ku/Ka antenna, which Hughes will offer for roaming outside its own Ka-band coverage footprint. Will this antenna be better than ViaSat’s solution, and more broadly will a combined Ku and Ka antenna (which inevitably has a smaller aperture and more beam skew problems) be a realistic alternative to high performance flat panels like Gogo’s 2Ku? The answer to that question will dictate whether ViaSat and Hughes can provide competition in the long haul passenger aircraft market over the next few years, or whether Panasonic, Gogo and Inmarsat will continue to dominate that segment until all three ViaSat-3 satellites are launched in the early 2020s, by which time most airlines will already have made their choice of provider.

03.10.17

I’m unashamedly stealing the title of the book which chronicles the Iridium bankruptcy, because not only did John Bloom give a talk at this week’s Satellite 2017 conference, but discussion of new LEO satellite systems dominated the conference itself. The proposed merger of OneWeb and Intelsat is only the most visible sign of this return to the 1990s, when Iridium and Globalstar’s satellite phones and Teledesic’s proposed broadband system fascinated both the satellite industry and the wider investing community.

But below the surface there is an even more radical shift going on, as most leading operators are cutting back on their investments in high throughput GEO satellites for data services, and many of them are focused instead on the potential of LEO and MEO systems. Intelsat has already indicated that it is cutting GEO capex, and the merger with OneWeb will mean most of its future capex will be devoted to LEO, in line with Masa Son’s vision of a huge new opportunity for LEO satellites.

However, SES, whose CEO stayed away from the conference, is also hinting at a reallocation of its priorities towards O3b’s MEO system, probably accompanied by a sizeable reduction in overall capex. Telesat is also focused on developing its Ka-band LEO constellation for next generation data services, leaving only Eutelsat (which has already announced that it will cut capex substantially) amongst the Big 4 focusing solely on GEO.

This is deeply worrying for satellite manufacturers, and even the indication by Boeing that GEO demand will “remain soft” at “between 13 and 17 satellites in 2017″ may prove to be overly optimistic. All satellite manufacturers now need to play in the LEO/MEO world, with Thales constructing O3b and Iridium, and Airbus taking the lead role on OneWeb, with SS/L as a major subcontractor.

That leaves Boeing, which is not part of any announced LEO satellite contract, but has its own proposal for a V-band LEO system, which is under consideration at the FCC, along with several rival filings. While Boeing has suggested in the past that it was open to partnerships to develop this concept, most people in the industry are convinced that it already has funding from a potential customer, given the amount of effort that Boeing is putting into developing V-band service rules at the ITU and FCC. Boeing has also indicated to these people that it does not need export credit funding for the project, which supports the idea that this project is backed by a deep pocketed US entity.

This aligns with the chatter I heard from a number of sources at Satellite 2017 that Boeing’s V-band development work is being funded by Apple, which is clearly trying to find the next big thing and has been exploring cars, TVs and other large market opportunities. Its not hard to discern why Apple might want to consider a satellite constellation, when SpaceX came out with a business plan last year that suggested SpaceX alone could generate $30B in revenue from satellite internet by 2025.

Just as in the car market there’s no guarantee that Apple would take this project forward to full deployment, but with SpaceX, SoftBank and now apparently Apple becoming enthusiastic about non-geostationary satellite systems, in addition to most of the main satellite operators, it seems that a dramatic reshaping of industry priorities is underway.

It remains to be seen whether this enthusiasm will last, or whether, like at the end of the 1990s, the pendulum will eventually swing back towards geostationary orbit. However, over the next few years, until we find out whether the ambitions of these visionaries can be realized, non-GEO satellite systems are likely to be the most important contributor to driving satellite communications technology forward.